Manufacturers Today Need To Go D2C To Stay In Business

The growth of the direct-to-consumer (D2C) trend is undeniable. In 2022, D2C e-commerce sales in the United States will reach $151.20 billion, an increase of almost 17% compared to 2021, according to eMarketer’s forecast. And according to Diffusion’s Direct-to-Consumer Purchase Intent Index, more than 2 in 5 Americans are familiar with D2C brands, and 69% have made at least one purchase directly from a manufacturer in 2021, bypassing marketplaces like Amazon and Walmart.

One of the causes behind this rising trend is that D2C companies can sell their products at lower costs than traditional consumer brands. This allows them to maintain end-to-end control over the making, marketing, and shipping of products, as well as build stronger relationships with their customers.

As a result, digital transformation is no longer an option for manufacturers but a must. “Every B2B manufacturer making consumer products will risk going bankrupt in 5 years, if they don’t start selling online, directly-to-consumers,” says Kristjan Vilosius, Founder and CEO at Katana, a manufacturing ERP software solution built to help scaling businesses streamline operations, inventory, and sales.

Offering Personalisation Options Key To Enhanced Customer Experience

Consumers expect to be given the opportunity to shape the products and services they use. According to research by Deloitte, more than 50% of consumers expressed interest in purchasing customised products or services, and 1 in 5 are willing to pay a 20% premium.

Businesses that do not offer personalisation options risk losing revenue and customer loyalty. But doing so also requires reimagining business operations, adapting strategy, and changing core processes such as manufacturing, distribution, marketing, and customer service.

It goes without saying that the D2C model is appealing to manufacturers. However, in this increasingly competitive and challenging landscape, many D2C brands will struggle to keep up with their growth trajectory while remaining profitable. Many will fail, industry titans are likely to acquire others, and some will survive and adapt, emerging as the brands of tomorrow.

Manufacturers can obtain a competitive edge through improved data management, resilient supply chains, advanced analytics that anticipate machine failures, and better inventory management from raw materials to finished goods.

The Future of Manufacturing is Flexible, Diverse, and Omnichannel

Large corporations have had tremendous success by adding D2C to their existing strategy, creating an omnichannel presence that gives them the reach they need to continue evolving and growing.

“The future of manufacturing is flexible, diverse, and omnichannel. Modern D2C manufacturers should optimise sales order fulfilment for made-to-order and made-to-stock workflows, centralize e-commerce and B2B operations, track inventory in real-time, and gain a complete view on business operations,” adds Katana’s Founder and CEO, Kristjan Vilosius.

For example, Nike’s bet on D2C and enhanced customer experience has proved so successful that the company stopped selling its products on Amazon in 2019. In addition, Nike capitalised on the personalisation trend by offering customers the possibility to create their own pair of Nike shoes. This move was pivotal in Nike’s ability to raise D2C sales to 39% of its total brand revenue in 2021.